When an association contracts out all of its servi...

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Question Number 35

When an association contracts out all of its services and has no employees, it is a best business practice to:A. Negotiate contracts within the bidding process.B. Purchase employment practices liability insurance.C. Assume the contractors carry their own insurance coverage.D. Increase the coverage under the D&O insurance policy.

A. Negotiate contracts within the bidding process.Incorrect Answers:B. Employment practices liability insurance is typically purchased by an association that has employees to provide coverage against certain types of claims by those employees, and usually accompanies a workers compensation insurance policy.C. The association MUST NEVER assume that contractors carry their own insurance coverage and should require all contractors to provide evidence of insurance.D. D&O insurance policies is designed to pay for wrongful acts that do not lead to property damage (PD), bodily injury (BI), personal injury (PI), or advertising injury (AI); an example of a claim for coverage under D&O would be if a board of directors is accused of not uniformly enforcing rules or covenants. Therefore, it is unlikely that the services of independent contractors would lead to claims under D&O.

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Question Number 35

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